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Wed 5 Feb 2014 07:38 PM

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Kuwait to probe Airbus, power project contracts

Parliament votes to investigate deals in latest case of lawmakers questioning projects

Kuwait to probe Airbus, power project contracts
A Kuwait Airways airplane lands in Beiruts international airport 07 September 2006, just after Israel lifted its punishing eight-week air blockade amid intense international efforts to underpin a UN-brokered ceasefire. A flight from Paris by national carrier Middle East Airlines was the first plane to land in Beirut, the hour Israel announced it would start to lift restrictions at precisely 6:00 pm (1500 GMT) 07 September. (AFP/Getty Images)

Kuwait's parliament voted on Wednesday to investigate a contract awarded to a GDF Suez-led consortium for a power project in the Gulf state and a deal between the state carrier and Airbus to buy and lease aircraft.

Politics have long complicated Kuwait's plans to modernise its infrastructure and to implement a programme to diversify the economy and enable it to compete as a Gulf financial centre.

Such parliamentary inquiries are common in Kuwait, where lawmakers often question large government projects and have delayed or scuppered them in the past.

Kuwait awarded the Az-Zour North Independent Water & Power Project (IWPP) last year to a consortium led by GDF Suez and which includes Japan's Sumitomo Corp and Kuwait's Abdullah Hamad Al Sagar & Brothers.

The project for a 1,500 megawatt power plant and desalination facility is Kuwait's first public-private partnership and a test for a country which has struggled to attract foreign investors.

South Korea's Hyundai Heavy Industries Co Ltd and France's Sidem are involved in the project's $1.43 billion first phase, due for completion in the first quarter of 2016.

Lawmakers also want to investigate all deals agreed by Kuwait Airways, which is attempting the biggest overhaul of its fleet since the 1990 Iraqi invasion.

In December it signed a provisional agreement with Airbus to buy 25 new aircraft in a deal worth $4.4 billion at list prices.

The order would include the purchase of 10 A350-900 and 15 medium-haul A320neo jets. The airline also aims to lease 12 aircraft from Airbus pending delivery of the new planes.

The power plant is part of Kuwait's 30 billion dinar ($106 billion) development plan announced in 2010, which also includes a new refinery and major causeway. The Airbus deal is meant to complement the development goals.

Parliamentary politics have held up parts of the scheme.

Critics of the lawmakers say they use parliament to settle personal scores and block development under the guise of serving the public. MPs say they are holding the government accountable for major business deals to ensure transparency and value for money.

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